KUALA LUMPUR, Oct 2 — The Budget 2024 deficit is expected to be between 4.0 to 4.3 per cent of the gross domestic product (GDP), in line with fiscal consolidation targets of the 12th Malaysia Plan Mid-Term Review (12MP MTR) and the Madani Economy, said Maybank Investment Bank (Maybank IB).
In a note today, it said Budget 2024, to be tabled on October 13, will be aligned with the government’s medium-to-long-term policies, including 12MP MTR (2023 - 2025), the New Industrial Master Plan (NIMP 2030), Madani Economy (2023 - 2033), and the National Energy Transition Roadmap (NETR 2023 - 2050).
“As government tiptoes on the goods and services tax (GST), tax measures will lean towards taxing income, profits and wealth such as capital gains tax on unlisted shares; luxury goods tax proposed in re-tabled Budget 2023, and adoption of the 15 per cent minimum global corporate income tax rate on MNCs.
“Other tax measures to keep an eye on are the review of the plantation sector’s windfall profit levy and the fate of Budget 2022’s consumption-related tax measures put on hold so far, such as the expansion of the ‘sugar tax’ base; the 6.0 per cent service tax on delivery service providers including e-commerce platforms; and 10 per cent sales tax on low-value goods,” Maybank IB said.
Carbon tax is not expected in the upcoming budget as the carbon pricing focuses on voluntary carbon market/trade as per the launch and progress of Bursa Carbon Exchange (BCX) since Dec 2022.
It added that Budget 2024’s incentives and budget allocations will include the implementation of the Progressive Wage System expected in the second quarter of 2024.
The budget is also expected to see the promotion of research and development (R&D), as the 12MP MTR and NIMP 2030 target to raise the R&D spending/GDP ratio to 2.5 per cent by 2025 and 3.5 per cent by 2030, it said.
“The budget is also expected to lift domestic direct investments, especially by micro, small and medium enterprises (MSMEs) in view of 12MP MTR and NIMP 2030 objectives of raising MSMEs shares of GDP and exports.
“Budget 2024 will also re-affirm the tabling of legislations such as Fiscal Responsibility Act and Government Procurement Act by year-end that will add meat to the fiscal consolidation, discipline and governance narrative and targets,” Maybank IB said.
— Bernama
